Landowners whose holdings will be acquired by the Arun III Hydropower Project have demanded a compensation amount

more than three times higher than that offered by the builder SJVN Arun III.

The joint venture company was formed by India’s state-owned SJVN and the government of Nepal to develop the project.

The owners have classified their 49 hectares of land into five categories—sloping land, small farm land, large cardamom field, paddy field and residential land. They have demanded compensation accordingly. Private land owners have asked Rs1.2 million per ropani for sloping land and Rs1.4 million per ropani for small farm land. Likewise, they have demanded Rs1.6 million per ropani for large cardamom fields, Rs1.8 million per ropani for paddy fields and Rs300,000 per metre for residential land.   However, at a tripartite meeting held with locals, the project developer and officials of Investment Board Nepal (IBN), which is overseeing the implementation of the 900 MW hydropower project, had proposed to classify the land into three categories—sloping land, large cardamom fields and paddy fields.

During the meeting, the project developer and IBN officials had offered Rs320,000, Rs550,000 and Rs650,000 respectively per ropani for sloping land, large cardamom fields and paddy fields, according to Biman Parajuli, vice-president of the Arun Stakeholders Forum who participated in the talks.

  “We have rejected the offer as it is way lower than our expectation,” said Parajuli. “We have signed a resettlement agreement plan with the developer and IBN under which we were supposed to get compensation of international standard. So, we want compensation as per the agreement,” he added.

The compensation determination committee, however, is unaware of the bargaining that has taken place between the landowners, board and developer.

“I am not aware of the rate offered or demanded,” said Khum Kanta Acharya, chief district officer of Sankhuwasabha and coordinator of the committee. “That might be unofficial bargaining as this committee is the official body to determine the compensation amount. We will determine the rate as per the fair market price of the land.”

The latest development could be a headache for SJVN Arun III, the project’s developer, as land acquisition is one of the important preconditions for financial closure. According to the Project Development Agreement (PDA) signed between the government and the developer, the company has to complete financial closure by November 2016.

There are 391 private land parcels, including 112 in Diding, 82 in Yaphu, 147 in Num and 50 in Pathivara VDCs. The project will also be acquiring the houses, cowsheds, huts and plants on those land plots. The tripartite resettlement agreement was signed by IBN, SJVN and locals of Sankhuwasabha in February. The resettlement plan complies with the Asian Development Bank’s ‘safeguard standard’ and the affected people will be compensated as per the international relocation and resettlement standard.

As per the agreement signed between IBN and SJVN in November 2014, the developer will complete the construction of the plant and start energy generation by 2020.  According to IBN, Nepal will receive Rs348 billion over 25 years from the project. SJVN will provide 21.9 percent of the energy generated free of cost, which is worth Rs155 billion, plus another Rs107 billion in royalties.